Political parties can deposit old Rs 500, Rs 1000 notes without paying any taxThe government has clarified that political parties will have to pay no tax if they deposit the demonetised Rs 500 and Rs 1,000 notes in their accounts.
The government has clarified that political parties will have to pay no tax if they deposit the demonetised Rs 500 and Rs 1,000 notes in their accounts.
Responding to a question on whether the government is also investigating political parties/political treasuries depositing their own cash in banks, Revenue Secretary Hasmukh Adhia said on Friday, "If it is a deposit in the account of a political party, they are exempt. But if it is deposited in individual's account then that information will come into our radar. If the individual is putting money in his own account, then we will get information.
Under Section 13A of the Income Tax Act, 1961, political parties are exempted from paying tax on income generated from house property, other sources, capital gains and income by way of voluntary contributions received from any person.
However, the political parties can avail the exemption only when in the case of all voluntary contributions in excess of twenty thousand rupees, such political party keeps and maintains a record of such contribution and the name and address of the person who has made such contribution.
The provision enables the political parties to accept anonymous contributions up to Rs 20,000.